European last mile guru Marek Rozycki made the prediction in his keynote address at the recent Hubbed Future of PUDO Conference in Sydney. PUDO stands for pickup and dropoff.
With e commerce retailers and carriers struggling to get the booming online products to individual homes, he predicted consumers would pick up parcels close to their home in the future at locations such as newsagents.
Online retail sales in Australia have grown by 14% annually during the past three years but one of the biggest problems is getting all those sales into consumers’ homes.
Mr Rozycki forecast out-of-home deliveries would solve important logistical problems for retailers, carriers and consumers alike. He said as a result, out-of-home deliveries would soon make up a significant component of the last mile market.
Mr Rozycki is Managing Partner at Last Mile Experts, a highly specialised consultancy group based in Europe focusing on all aspects of e commerce and lastmile logistics.
He was also the former Vice President of Amazon Logistics Europe.
Hubbed is a leading Australian parcel collection point network of more than 2000 retail locations used by Australia’s major carriers.
In his presentation, Mr Rozycki said the cost of the last mile accounted for approximately 41% of supply chain costs.
“With many consumers already feeling that home delivery methods are outdated, parcel collection point networks such as Hubbed are growing because they guarantee successful first-time deliveries and increase delivery density to collection points – both reducing costs for carriers,” he said.
“Out-of-home delivery is becoming crucial for the delivery sector because it offers a virtually guaranteed first-time delivery solution. It is also increasingly important to the overall consumer experience because is it currently the only way to manage massive volume growth without excessive service failures and costs.”
He said the increasing failure by legacy players to address problems with the last mile had led newcomers to disrupt the market, both domestically and internationally. He said he anticipated the three areas of out-of-home deliveries that would grow in Australia would be lockers, collection point networks and click and collect services.
“With regards to lockers, some experts are already pointing to the IT and physical security issues – such as power outages and their vulnerability to hackings, intrusion, vandalism and robbery. Some overseas industries are already addressing physical security issues with innovative technologies such as video cameras, movement and vibration sensors.”
He said collection point networks, with their proximity to consumers, familiarity and simplicity of use, would see significant growth.
For example, Hubbed, after launching in Australia in 2014, has grown to 2000 locations around the country within five years, has recently launched in New Zealand and is set to launch in several Asian markets this year.
Mr Rozycki said a significant part of Hubbed’s success was its carrier agnostic approach and easy-to-use network processes, systems and tools for consumers and retail operators.
He said in-store click and collect offerings also had plenty of space to grow, especially as consumers become increasingly environmentally driven in their choices and embrace greater control and convenience.
“By giving customers what they want, e-tailers can also build loyalty and drive income. In fact, the research shows that almost two-thirds of customers spend more when they use click and collect.”
Founder and CEO of Hubbed David McLean said customers expected higher levels of service and choice when it came to e commerce.
"They are demanding more control after the purchase experience and this obviously includes delivery and collection,” Mr McLean said.
“This, coupled with the demand for more environmentally friendly options, means that sustainable shopping now extends to sustainable shipping. Pick-up drop-off (PUDO) and collection points, such as Hubbed, which has more than 2000 locations nationally, support this process from the get-go.”
In his presentation, Mr Rozycki shared seven international trends in last-mile delivery that he forecasts may soon be seen in Australia:
1. In-store click-and-collect drive-thru. Continued growth for click-and-collect parcels in the future, especially at major supermarkets or grocery stores. In some cases, employees will bring the packages out to individuals waiting in their cars or a specified pick-up location via a ‘drive-thru’ type model.
2. Smart locks that power in-home and in-garage delivery. Delivery drivers might soon be able to leave parcels in the home, garage or other secure locations via smart locks. For this type of delivery, homeowners would be notified when the delivery driver has arrived, and they would provide permission for them to access the property to make the delivery.
3. In-fridge delivery. Would you let delivery drivers enter your home to place food deliveries in the fridge? Maybe not. However, this method of delivery will become possible via smart locks and drivers with cameras, allowing the consignee to see what is happening throughout the delivery.
4. AGVs (robots). Robots, or ‘bots’, are being tested in various places but will still take time to be used at scale.
5. Leave with a neighbor or ‘safe drop’. This method can be utilised in cases where a parcel is being delivered to the home, when the customer is out. In these instances, the customer can elect to have their parcel left with a neighbor or a pre-determined location that they deem is safe.
6. UAVs (drones). Delivery providers are already utilising drones for specialist deliveries. As with AGV’s, it will take time before this happens at scale.
7. 3D printing. This would allow consumers to have suitable products 3D printed at local access points, which will have the potential to drastically reduce the movement of freight in urban areas.
